The Euphoric Loop – 25th February 2015

We added SHORT SAM to our US Focus List (Link – Q1 Focus List Update) on 1/1/15. At that time, our data across the US Brewers (US15.96) was showing a substantial decline in volumes (-2.9%), implying a much more challenging Q4 sales environment than appeared in consensus estimates. SAM’s results today confirm this, with Q4 volume growth falling to just +4% yoy – from +23% yoy in November. The group also comments that the already competitive operating environment ‘will be tougher’, and has guided the market to expect sales growth of 9-14% (volume: 8-12% and price 1-2%) which is below the +16% consensus sales growth estimate currently on Bloomberg.

As a result of the weaker than expected estimates, the shares traded -13% in the after market and we expect downgrades to consensus estimates. That said, these results confirm our cautious view, and we will be closing out our SHORT position.